With Lender Paid or Borrower Paid MI (mortgage insurance)

With Lender Paid or Borrower Paid MI (mortgage insurance)

Private mortgage insurance, or PMI, protects the lender in case you default. You're usually required to get PMI if you make a down payment that's less than 20% on a conventional loan.

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What does Lender Paid MI mean?


Single Premium mortgage insurance


Lender Paid Mortgage Insurance is a form of PMI that is paid for by the lender via a one-time fee, rather than by the borrower monthly. Some form of PMI is required whenever a borrower puts less than 20% down on a conventional loan. For this reason, LPMI is sometimes referred to as Single Premium mortgage insurance.

Advantages


  • Borrower-paid mortgage insurance is a temporary expense you can eliminate once you have at least 20 percent equity in your home. Lender-paid insurance saves you money up front but results in a higher mortgage interest rate that may cost you more over the life of the loan as it cannot be canceled.

What is single premium mortgage insurance?

With single-premium mortgage insurance, the borrower makes one lump-sum payment upfront. The single premium can be paid as part of the closing costs or financed into the loan.

Is PMI based on credit score?

The higher the score, the more creditworthy a borrower appears to banks and mortgage lenders. As a result, the higher the credit score, the lower the PMI premium.

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